MADRID, Oct 31 (Reuters) - Mortgage lending in Spain fell 42.3 percent in September from a year earlier, official data showed on Friday, and separate data confirmed the sector's bleak state, showing existing house prices fell 7.5 percent in October.
As banks became choosier and homebuyers demanded fewer mortgages because of falling prices and the weakening economy, financial institutions lent just 5.2 billion euros ($6.8 billion) over the month versus 9.09 billion a year earlier, the Bank of Spain said in a statement.
September's drop was less severe than the 47 percent fall in August.
Meanwhile, the country's largest online property portal www.facilismo.com, said the asking price of existing homes tumbled 7.5 percent year-on-year. The figure excludes often hefty discounts conceded by desperate sellers in the near-paralysed market.
Prices, which fell 0.82 percent over the month, are now at their same level as three years ago, said Facilisimo which surveys the prices of 100,000 existing properties.
"The price of housing could continue gently declining but I don't think we'll witness a collapse of prices," said Facilismo's Operations Director Juanra Doral.
Many economists and builders of new homes agree the chief problem is not the falling price of homes but the lack of deals. House sales fell 36.8 percent year on year in August, the national statistics office showed.
Thursday's figures from the Bank of Spain also showed banks lent 2.78 billion euros in consumer credit -- a 28.5 percent fall compared to September last year -- amid a crisis of consumer confidence that is being fed by the euro zone's highest rate of unemployment. (Reporting by Robert Hetz; translating by Ben Harding)